Bankrupt Dunedin lawyer owes $2.9m

Insolvency agency the Official Assignee has found more than
$2.9 million of funds was gleaned from clients of
self-bankrupted Dunedin lawyer John Milne, who now faces four
professional misconduct charges over the matter.

Mr Milne was charged by the standards committee of Dunedin
branch of the Law Society in late November, and he will be
prosecuted by Christchurch solicitor Gerald Nation, on behalf
of the Law Society.

Mr Milne remains under investigation by the Serious Fraud
Office, which does not comment on investigations until they
are concluded.

Mr Milne, faces four charges before the New Zealand Lawyers
and Conveyancers Disciplinary Tribunal, alleging professional
misconduct, relating to receiving and dealing with clients'
funds.

Mr Nation said when contacted he expected to know by early
March when a date and venue would be set. The case could be
heard in Dunedin.

Five months ago, Dunedin solicitor Alistair Paterson
initiated a register of affected persons, for investors to
identify themselves to, which could collectively look at
issues surrounding the clients' legal rights and possibility
of compensation.

Contacted on Friday, Mr Paterson said he had been contacted
by only five of the total 38 claimants, who had notified
their losses to the Official Assignee.

Mr Milne was adjudged bankrupt in the High Court at
Christchurch last November.

Mr Paterson said public documents collated on his bankruptcy
showed estimated claims stood at $2,960,224.

He estimated $137,497 was owed to banks and sundry creditors,
while the balance of $2,768,727 were funds given to Mr Milne
by clients, over a long period.

The three largest sums involved were $964,000, $315,000 and
$240,000. Five were around $100,000 or more and 14 sums were
$10,000 or less.

Convener of the standards committee of the Otago branch of
the Law Society, David More, when contacted, said Mr Milne
had been served with the four charges.

It appears that while few clients have come forward to join
Mr Paterson's register, some could seek compensation from the
Law Society's two fidelity funds.

However, key to any compensation claim is whether the clients
lent money to Mr Milne, or whether they were expecting
returns on an investment.

Asked if the disciplinary tribunal would be considering the
compensation issue, Mr More said he understood that while the
tribunal had the power to do so, with Mr Milne bankrupt it
was now up to the Official Assignee, which controls Mr
Milne's estate and assets, to determine what funds might be
available.

Mr Nation understood the tribunal would not not be making any
ruling on compensation.

Mr Milne, who no longer has a practising certificate, had his
legal practice in Dunedin for several decades before it was
purchased by Dunedin law firm Craig Paddon Law, about five
and a-half years ago.

Mr Milne later worked for that firm in Christchurch, from
July 2008, but ceased employment in June last year. The law
firm had been unaware of claims Mr Milne borrowed money from
clients.